Phased Retirement Policy

414.1 VOLUNTARY PHASED STAFF RETIREMENT

Voluntary Phased Staff Retirement is a means of transitioning retirement-eligible staff from full-time employment to retirement by permitting a reduced work schedule while preserving eligibility for many valuable University benefit programs. Requests to be placed on Phased Retirement must be voluntarily initiated by the staff member. Department managers and supervisors cannot impose a Phased Retirement agreement on a staff member. Phased Retirement enables the staff member’s department to retain the knowledge and skills of the staff member during a period of transition while also aiding the staff member in meeting their personal goals/obligations.

414.2 ELIGIBILITY

To be eligible for Phased Retirement, a staff member must be eligible for retiree health benefits under the University's Health and Welfare Plan for Retirees and Disabled Employees by meeting the age and service requirements under that plan, as follows:

General rule: The general rule is that a staff member is an eligible retiree if he/she meets the "Rule of 75"—that is, the sum of the staff member’s age and years of service totals at least 75—and the staff member (i) has attained age 55 and completed 15 years of full-time and continuous service or (ii) has attained age 62 and completed ten years of full-time and continuous service.

Special rule for certain "grandfathered" staff members: Even if the staff member does not meet the Rule of 75 described above, he/she meets the eligibility requirements if, as of December 31, 2008, the staff member (i) has attained age 55 and completed 15 years of full-time and continuous service or (ii) has attained age 62 and completed ten years of full-time and continuous service.

The rules under the University’s Health and Welfare Plan for Retirees and Disabled Employees, including the rules that apply for purposes of calculating years of service, apply for purposes of the above eligibility requirements.

Staff members who are part of collective bargaining agreements are not eligible for Phased Retirement.

IMPORTANT: The existence of the Voluntary Phased Staff Retirement Program does not give staff members a contractual right or entitlement to Phased Retirement or continued employment. The University has sole discretion to approve or deny any request for Phased Retirement or terminate such arrangement at any time for any lawful reason.

414.3 TERMS OF PHASED RETIREMENT

Subject to the University's specific agreement to the terms of a particular Phased Retirement appointment, a Phased Retirement shall be subject to the following terms and conditions:

Duration: Phased Retirement may continue for a period of up to two years at which time the staff member will have to retire as agreed. The Phased Retirement arrangement should be reviewed every six months for continued appropriateness (though it may be reviewed at any time by either Human Resources or the department). If the arrangement is no longer meeting the needs of the department, the staff member may choose to retire or return to work on a full-time basis in the same or an equivalent position with equivalent pay, benefits, and other terms and conditions of employment. If the arrangement is no longer meeting the needs of the staff member, he/she may choose to retire or discuss alternative arrangements with the department; based on business needs, the department will make the final decision on alternative arrangements, if any.

Reduction in Work Schedule: Phased Retirement involves a reduction in work schedule. The reduced work schedule shall not be less than 60% of the staff member’s prior work schedule.

Salary: A staff member's salary during Phased Retirement shall be reduced in proportion to the reduction in level of work (e.g., the salary of a staff member who is working full-time and goes to a 60% Phased Retirement schedule would be 60% of the staff member's full-time salary). During the period of Phased Retirement, staff members in Phased Retirement shall be eligible for promotional, merit or other salary increases based on the reduced salary.

Benefits: With a few exceptions as described below, if a staff member is approved for Phased Retirement, the staff member will be eligible for all University benefit plans and policies just the same as if the staff member was a full-time staff member. The exceptions are as follows:

If a benefit plan requires a certain amount of service in order to receive a benefit (e.g., the Retirement Allowance Plan requires 1,000 hours of service in a 12-month period to accrue a year of service), a staff member will not receive a benefit under that plan unless the staff member satisfies the applicable service requirement.

If a benefit plan provides a benefit based upon the amount of a staff member's compensation (e.g., life insurance benefits are based upon benefits base compensation), the staff member's benefit will based on the staff member's lower compensation during the period of Phased Retirement.

If a leave policy plan requires a certain amount of service (e.g., eligibility for benefits under the Family and Medical Leave Act requires 1,250 hours of service in a 12-month period), a staff member will not be entitled to receive leave under that policy unless the staff member satisfies the applicable service requirement.

Paid time off (including sick leave and holidays) will be pro-rated based on the staff member’s reduced schedule.

The benefits that will be available to staff members approved for Phased Retirement are described here.

Retirement: The staff member agrees to retire from his/her current position at the end of the Phased Retirement period. The staff member will not be eligible to be rehired into the same Penn school/center/department for at least two years following the end of the Phased Retirement period.

Not Eligible for Other Termination Benefits: Staff members who have entered into Phased Retirement shall not be eligible for other termination benefits under any other University plan, policy, or arrangement. However, the staff member may be entitled to benefits under the University's Position Discontinuation and Staff Transition (PDST) Policy if the staff member's position is discontinued under the PDST Policy during the Phased Retirement period due to budgetary or other reasons unrelated to the Phased Retirement arrangement. Pay continuation benefits under the PDST Policy will be based on the staff member’s regular base pay prior to Phased Retirement if the position discontinuation occurs within the first six months of the Phased Retirement period. If the position discontinuation occurs after the first six months, pay continuation benefits will be based on the staff member’s reduced base pay at the time notice of the position discontinuation is given.

Not Grievable: The Staff Grievance Procedure (Policy 620) does not apply to any decisions regarding Phased Retirement requests. Also, Phased Retirement decisions are not subject to review in the benefits appeal process.

414.4 APPLYING FOR PHASED RETIREMENT

The staff member must apply for Phased Retirement. The focus of this application process is for the staff member and the University to engage in a discussion about whether a staff member is an appropriate candidate for Phased Retirement, and, if so, how the staff member’s job duties will change during the period of Phased Retirement to meet the needs and interests of both the staff member and the University.

If a staff member determines that he/she is interested in Phased Retirement, the staff member should first contact the Benefits Office in the Division of Human Resources at 215-898-1327 to confirm that he/she meets the eligibility requirements for Penn’s retiree health program. The staff member should then make an initial Phased Retirement proposal to his/her immediate supervisor. The initial proposal may be verbal or in writing, and should include a general description of the proposed work schedule during the period of Phased Retirement, the duration of the Phased Retirement period, and how the staff member’s job duties will be restructured in order to satisfy the needs of his/her position and the needs of the department during the Phased Retirement period. A Phased Staff Retirement Proposal template can be found here.

Following discussion of the initial proposal, if the staff member and his/her immediate supervisor agree to pursue the Phased Retirement, they should prepare a draft Phased Staff Retirement Agreement and a revised Position Information Questionnaire (PIQ) for approval by the appropriate senior administrator. Click here for a sample Phased Staff Retirement Agreement. PIQs can be found here.

The senior administrator must then send the revised PIQ to the Compensation Department in the Division of Human Resources for evaluation. Once the Compensation Department approves the PIQ, the senior administrator or designee shall make the final (and binding) decision to approve or deny the staff member’s Phased Retirement application. The Compensation Department should be notified when the Phased Retirement agreement is finalized and should also receive a copy of the agreement. Once the agreement is finalized, the Compensation Department will send the senior administrator a Reclassification memo to authorize moving the staff member to Phased Retirement status in Pennworks.

Copies of the signed Phased Retirement agreement should be given to the staff member, retained in the departmental files and sent to the Benefits Office. Human Resources will place a copy of the agreement in the staff member’s official personnel file.

At the end of the Phased Retirement period, the staff member must retire and commence participation in the Retiree Health and Welfare Plan and any other University benefit programs that cover retired staff members (such as tuition benefits—see Policy 406, Policy 407, Policy 408and Policy 409).

BENEFITS DURING PHASED STAFF RETIREMENT

Same eligibility as full-time staff members\Notes

Health/Medical

DentalLife InsurancePre-Tax Expense AccountsRetirementTax-Deferred Retirement Plan Based on reduced salarySupplemental Retirement AnnuityRetirement Allowance Plan Must work 1,000 hours in a 12-monthperiod to accrue a year of serviceTime Away from WorkShort-Term DisabilityFamily and Medical LeavePaid Time OffPro-rata basisSick LeavePro-rata basisHolidaysPro-rata basisLeave with PayPro-rata basisOtherTuitionLong-Term Care

414.5 UNIONIZED STAFF MEMBERS

University staff members who are covered by collective bargaining agreements should refer to the appropriate contract article.

Phased Staff Retirement Proposal TemplateThis sample proposal lays out a plan for Phased Retirement implementation that should be acceptable to all affected parties (supervisor, staff member and colleagues).

Instructions for Business AdministratorsThese instructions help Business Administrators update the staff member’s Payroll record to reflect the Phased Retirement agreement and calculate the Paid Time Off (vacation) payout upon separation.